TechTarget: People have been trying to graft the telecommunications and IT businesses together for many years. Some of us can even remember that Telstra and Microsoft launched a major partnership covering the Microsoft Network in 1995. What's different this time around?

Kevin: First, this announcement covers real, tangible products. Second, what makes a partnership work well is the philosophical alignment between the two organisations. And then there's the people. We have the philosophical arguments, and the working teams in Telstra and Microsoft have establisht trust and credibility. So, the relationship is good, and these products are real. The UI is working now, and will be fully released soon. Microsoft Online Communication Services and Telstra IP Telephony are working now. And Microsoft Online Services over Telstra T-Suite are working.

Ross: Look at what we've already done – we've rolled out NextG and NextIP, and IP Telephony as well as Online Communication Services. These are real. And what the customers are telling us is that they need to be more effective, more productive, and they need usability.

So the time is right – the technologies are there, the partners are there, and the customer requirements are there. And people are more comfortable with IP Telephony.

Kevin: And the level of service you can deliver – the security and reliability means people are more willing to come to us and say “go ahead, host it for me”.

TechTarget: Since reliability is on the table, that's a big issue for software-as-a-service. If a SME's phones go down, people can carry one working on their computers. If the computers go down, they can still make phone calls. If an environment like this fails, you can't do anything – people are going to depend on this.

Ross: It has to be a carrier-grade network – and we have that. Telstra's NextIP network is a carrier grade network that customers already depend on. So to use it for telephony is not difficult at all.

Kevin: Microsoft has been providing hosted solutions for a number of years, and we've been building very strong, very rigorous data centres. So we've built these applications to be robust, and to put that robustness into the environments that host them.

TechTarget: But if I look at an old telecommunications “standard form of agreement”, I don't just get a promise of 99.5% or 99.9% or “five-nines” availability – there's also going to be a table telling you what rebates and penalties apply to downtime. When will software-as-a-service reach that level?

Ross: Well, leaving rebates out of the question for a moment, there's no doubt that customers will expect that the software will get the same level of service as the network. And we know that the IP network has to be built to match those service levels – the IP core has to be better, and that's how we built it. When it comes to the cloud applications, we're working through the detail of service levels, and we're looking to have that work done by Q1 in 2009. It must be something that the customers want, and that the customers will pay for.

Kevin: At a minimum the software and the network together must be 99.9% ...

Ross: ... and they should be five nines if possible ...

Kevin: Yes, and of course, we would want them to have an integrated SLA covering both the network and the applications.

TechTarget: If I look at the “hits” of cloud computing, some of them have come entirely by surprised. Sorry to use a rude word here, but look at Google Maps: who would ever have predicted that what's essential an interface to a GIS application would be a huge popular success? This agreement focuses on getting some icon applications into the cloud – but how do you leave room for the accidental discovery?

Kevin: We have a plant to migrate more applications into the cloud. And we are trying to incubate ISVs into the cloud, and the help developers take applications into a multi-tenanted, hosted environment, and make that part of T-Suite.

We want to help drive that market as well. We want to put those applications into the network, and make them part of Microsoft's online world – so we have to make it easy for people to get involved.

The mobile user interface we demonstrated [at the launch press conference] from PointUI is a good example of a small ISV in Victoria with the backup of two strong brands in Telstra and Microsoft.

TechTarget: Exclusivity is a trade-off, isn't it? Microsoft gets onto Telstra's network, which is the largest in Australia but not the only network in Australia. And Telstra highlights Microsoft applications. Wouldn't both markets be bigger without exclusivity?

Ross: It sometimes seems like a trade-off, but I'm not sure how much of a trade-off. We're bullish about it – Microsoft adds to Telstra, so it's not “limiting” in any way. We are okay to challenge the market based on that.

Kevin: You're always making business decisions. We looked carefully at this, and it just made sense. There's nothing to preclude the sale of Microsoft Software Online through T-Suite by a partner, to someone who's not on a Telstra broadband connection, but we think the combination of the two is a compelling offer.

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